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ai-bubble
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AI Is Distorting Practically Everything About the Economy
The Mag-7 aren't leading the economy; they're substituting for it. Strip out tech equipment, software, and data-center construction, and Q1 GDP growth was effectively flat — Tedeschi's import-netting cuts AI's headline contribution from 1.7pp to 0.4pp, with the remainder leaking to Taiwan and Korea. That makes the Fed's reaction function structurally late: the number it's reading is real, but what it's measuring isn't.
Klement: The Impossible Maths of the AI Boom
Klement's FT op-ed makes the cleanest bear case to date: hyperscaler capex grows 20 percent annually through 2030 against 15 percent revenue growth, and under a zero-cost assumption the implied ROI is highly negative for every hyperscaler except Amazon. Clearing a 10 percent return requires 2 to 5 trillion in additional annual revenue against a current 1.5 trillion base. The methodology is opaque and the Amazon exception goes unexplained, but the piece's real signal is positional: when the bear case migrates from Substack to FT op-ed pages, with Chancellor, Constan, WSJ Heard on the Street, and Munster all aligned within five weeks, the consensus has moved. The contrarian trade is now bull on capex sustainability, contingent on smooth IPO absorption and one quarter of hyperscaler AI revenue acceleration outpacing capex growth.
Eric Schmidt: The Age of Agents, Superintelligence, and Why Europe Is Falling Behind
Schmidt says the gains are real but concentrated in software, cyber and math, where learning loops are fast, and biology lags on data. The effect he is most confident about is organizational: a friend's firm cut 20% of staff, the 'glue' planners, and an estimated 2,000 of 10,000 people at a large firm are unneeded. Read against deBoer's cancer example, displacement arrives first where the work is coordination, not where the problem is physical.